Awaiting U.S. Data on this Historic Anniversary

August 15, 2013

There is a big U.S. data release calendar that includes industrial production, the Philly Fed and Empire State manufacturing indices, the National Association of Home Builders index, Treasury-reported capital flows (TIC), and weekly jobless insurance claims. Former President Nixon severed the link between the dollar and gold 42 years ago today.

Trading in Europe was dampened by the observance of Assumption Day. France and Italy are closed, and Greece, Portugal and Spain were affected.

Sterling, which has become more sensitive to British data releases, got a boost from stronger-than-forecast retail sales, rose 0.5% against the dollar. Otherwise, the U.S. currency lost 0.7% versus the kiwi, 0.3% against the Australian dollar, 0.2% vis-a-vis the euro, and 0.1% versus the loonie and yuan. The dollar edged up 0.1% against the yen.

The yield on 10-year British gilts rose another three basis points to 2.67%. Japanese JGBs are unchanged, and the 10-year German bund dipped a basis point.

Commodities are firmer. WTI oil advanced 0.7% to $107.55 per barrel, while gold climbed 0.4% to $1339.20 despite a rise of India’s higher duty on imports of precious metals. India’s government also announced greater restrictions on investing overseas in an effort to support the beleaguered rupee.

Japan’s Nikkeidropped 2.1%. In other equity action around the Pacific Rim, stocks fell 1.2% in China, 0.8% in Taiwan, 1.1% in the Philippines and 0.5% in Thailand. In Europe, the British Ftse and German Dax show losses of 0.8% and 0.6%.

Bank Indonesia as expected did not extend the tightening done in recent months, instead leaving its benchmark interest rate at 6.5%.

Japan’s government left its monthly overall business assessment unchanged but upgraded the view on the labor market. Officials believe that the economy is picking up steadily and that deflation is coming to an end.

Net Japanese purchases of foreign bonds last week soared 134% to JPY 1.615 trillion. All bond and stock transactions generated a JPY 1.259 trillion net capital outflow versus an outflow in the prior week of August 2 that had totaled JPY 590 billion.

Released New Zealand data revealed a 3.5% jump in job ads, a 4.3-point increase in the business purchasing managers index to 59.5 (highest in years), and a 2.7% improvement in consumer confidence. Australian CPI inflation expectations decelerated to 2.3% this month from 2.6% in July.

British retail sales grew 1.1% in July and recorded a 12-month increase of 3.0%. On a core basis, sales also went up 1.1% with a 3.1% on-year gain.

Turkey’s current account deficit narrowed 39% to $4.45 billion in June. Turkey also announced lower unemployment for last quarter.

By contrast, Singapore retail sales in June were disappointing, dropping 6.9% on month and 4.0% on year.

South African wholesale turnover dipped 0.2% in June but posted an unchanged 7.5% increase from a year earlier.

In the year to July, producer prices rose by 0.5% in Denmark and 1.1% in the Czech Republic. Norway’s trade surplus widened 10.3% last month as export growth of 6.5% was nearly twice as much as import growth.

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